Women’s financial liberation

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The amount of your pension is a key factor in determining whether you will be economically independent and enjoy self-determination in old age. Throughout Europe, however, women still receive significantly lower pensions than men and they are worried about falling into poverty when they are old. The good news is that women can help themselves and improve their situation.

Wage inequality between men and women is a well-known problem. The pension gap between men and women, on the other hand, receives considerably less attention. The gender pension gap was first systematically studied in the European Union in 2013 and last year in Switzerland. It is thus not surprising that the broader public are largely ignorant about the extent of the gender pension gap.

We recently asked how much lower women's pensions were compared to their male counterparts in a quiz on our website. Just under half of the respondents assumed that women's pensions were about 20 percent lower, similar to the gender pay gap.

The gulf is twice as wide

In fact it’s much worse than that as the gender gap is twice as pronounced for pensions compared to wages: it averages out at 39% over Europe. Only every tenth quiz respondent knew that.

This lack of awareness is a serious issue as the pensions gap starts to open up at an early stage in a person's working life. The amount of your pension basically reflects the course of your career.

Why women lag behind in the pension stakes

The two main factors behind the gender pension gap are the duration and nature of employment: women earn less and often have lower-paying jobs as well as being underrepresented in management positions, they also tend to work part-time more than men. Moreover, women are much more likely than men to take a career break to look after children or relatives.

Many women are in a precarious situation after retirement and financially dependent on their partner.

Current pension levels thus reflect past discrepancies, especially the traditional division of roles and the associated implications for a woman's place in the labour market. They are also an indicator of problems in the future: many women are in a precarious situation after retirement and financially dependent on their partner.

Should the partner sort it out?

Do women need to change their approach to pension provision? “The sum of the pension is usually calculated for a couple”, says Eric Le Baron, CEO of Swiss Life Assurance et Patrimoine in France. “As women tend to live longer, they should model their pension on the basis of their partner dying. Then they can start saving early enough and offset any lost income.”

As women tend to live longer, they should model their pension on the basis of their partner dying.

Eric Le BaronCEO of Swiss Life Assurance et Patrimoine in France

However, the reality is different: a representative survey by Swiss Life Germany with 2062 respondents, clearly demonstrates that. More than one in two women worry about falling into poverty in old age. Four in every ten women admit they would have to reduce their standard of living considerably were it not for their partner.

More individual initiative and financial awareness is called for, plus a change in attitude

“Women have to make significantly greater provision than they do now,” says Matthias Wald, Head of Sales and member of the Executive Board of Swiss Life Germany. More than one in three respondents to the Swiss Life Germany survey admitted that they had not done enough for their own pension provision to date. “Women pay less into their pensions on average – many take a break for their children or to care for relatives for a number of years”, says Wald. He stresses: “We need to be more aware of this issue.”

Finance is not taught properly in our education system. “We need to equip young people with the knowledge they need to set up their private financial planning at an early stage.”

There is also an onus on employers to reduce the gender pension gap. “Employers should have flexible working time models to harmonise work with family commitments. They should also offer childcare and promotion prospects for women”, argues Wald.

Finance is not taught properly in our education system. We need to equip young people with the knowledge they need to set up their private financial planning at an early stage.

Matthias WaldHead of Sales and member of the Executive Board of Swiss Life Germany

In addition to corporate measures and more individual responsibility being shown by women, a change in societal attitudes is integral to achieving a really sustainable solution. “Besides an improved distribution of family duties and family-friendly working conditions, society needs to keep dismantling gender stereotypes and accept equality in distributing roles”, says Colette Nova, Vice Director of the Swiss Federal Social Insurance Office.